ACCIDENTS AND DAMAGES IN MARITIME COMMERCE

What are the accidents in maritime commerce?A. AveragesB. Arrival under stressC. CollisionD. Shipwreck

Marine Protest or Protest- is a written statement by the master of a vessel or any authorized

officer, attested by proper officer or a notary, to the effect that damages has been suffered by the ship.

Required in the following instances:1. Vessel makes an arrival under stress2. Vessel is shipwrecked3. Vessel has gone through hurricane or the captain has suffered damages or averages4. Maritime collisionsNote: Should be made within 24 hours following the arrival of the vessel at the first port. Upon arrival at the place of destination, the captain shall ratify theprotest within 24 hours.

A. AVERAGES- is a loss or damage accidentally happening to a vessel or to its cargo

during a voyage. Also, a small duty paid to masters of ships, when goods are sent in another man’s ship, for their care of the goods, over and above the freight.1

Averages may consist of:1. Expense to the carrier

- Requisites: a) such expense must be extraordinary or accidental;b) the expense has been incurred during the voyage; andc) the expense has been incurred for the preservation of the

vessel or cargo, or both.2. Damage or Deterioration

- Requisites:a) such must have been suffered from the time the vessel puts

to sea from the port of departure until it casts anchor in the port of destination; and

b) have been suffered by the goods from the time they are loaded in the port of shipment until they are unloaded in the port of consignment.2

Classifications of Averages:1. Simple or Particular Averages2. Gross or General Averages3

In classifying averages into simple or particular and gross or general and defining each class, Articles 809 and 811 of the Code of

1 Black’s Law Dictionary, Sixth Ed.2 Art. 806, Code of Commerce.3 Art. 808

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Commerce at the same time enumerates specific cases as coming especially under one or the other denomination.

Particular Averages- include all damages or expenses caused to the vessel or cargo that

did not inure to the common benefit.4

- The owner of the things which gave rise to the expenses or suffered the damages shall bear the simple or particular averages.5

- REIMBURSEMENT is NOT ALLOWED!!!

General Averages- Damages or expenses deliberately caused in order to save the vessel,

its cargo or both from real and known risk.6

- All persons having an interest in the vessel and cargo therein at the time of the occurrence of the average shall contribute.7

- REIMBURSEMENT is ALLOWED!!! Thus, the person who incurred such damages or expenses can ask for reimbursement from persons who benefited upon saving the vessel or cargo, or both.

Requisites of General Averagesa) A common danger is present;

- the danger must be imminent and apparently inevitable, except by incurring loss a portion of the associated interests to save the remainderb) There is deliberate sacrifice of part of the vessel or cargo, or both;

- there must be a voluntary sacrifice of a part for the benefit of the whole

- example: a voluntary jettisonc) The sacrifice results to a successful saving of vessel or cargo, or both; and

- for if nothing is saved there cannot be any such contribution in any cased) Damages or expenses should have been incurred after taking proper procedure and legal steps.8

- In order to incur the expenses and cause the damage corresponding to general average, there must be:

a) assembly and deliberation of the sailing mate and other officers of the vessel with the captain;

b) resolution of the caption;c) entry of the resolution in the logbook;d) minutes include the signature of both parties; and e) delivery of the minutes to the maritime judicial authority of the first port,

within 24hours from arrival9

What are the goods not covered by general average even if not sacrificed?1. Goods not recorded in the books or records of the vessel (Art. 855[2])2. Fuel for the vessel if there is more than sufficient fuel for the voyage (Rule IX, York‐Antwerp Rule)

Distinctions Between General Averages and Particular Averages

4 Art. 8095 Art. 810, Code of Commerce6 Art. 8117 Art. 8128 Magsaysay, Inc. v. Agan, supra., 31 January 1955; The Star of Hope v. Annan, 76 U.S. 203, Justice Clifford.9 Arts. 813 and 814, Code of Commerce.

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GENERAL AVERAGE

PARTICULAR AVERAGE

Both the ship and cargo are subject to the same danger

No common danger to both the vessel and the cargo

There is a deliberate sacrifice of part of the vessel, cargo, or both

Expenses and damages are not deliberately made

Damage or expenses incurred to the vessel, its cargo, or both, redounded to the benefit of the respective owners.

Did not inure to common benefit and profit of all persons interested in the vessel and her cargo.

All those who have benefited shall satisfy the average.

Only the owner of the goods benefiting from the damage shall bear the expense of average.

York-Antwerp Rules- an international system of rules, providing among others, for

liquidation and payment of averages, provides that the rights to contribution in general average shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the adventure. However, this shall not prejudice any remedies which may be open against that party for such fault.

- Liability for contribution on averages under this rule:1. Deck cargo is permitted in coastwise shipping but prohibited in overseas shipping2. Overseas trade – must always contribute to general average, but should the same be jettisoned, it would not be entitled to reimbursement because there is violation of the Y-A Rules3. Coastwise shipping – must always contribute to general average and if jettisoned would be entitled to reimbursement

Jettison- Act of throwing overboard part of a vessel’s cargo or hull in hopes of

saving a ship from sinking.

Order of Goods to be Cast Overboard in case of Jettison1. Those on deck, preferring the bigger bulk with least value.2. Those below upper deck, beginning with the heaviest with least utility.10

Things to Remember in Cases of Overseas and Inter‐island trade as to Reimbursement and Payment of General Averages on Jettisoning Cargoes

OVERSEAS TRADE INTER-ISLAND TRADE

In case of overseas trade, the York‐Antwerp Rules prohibit

In case of interisland trade, the York‐Antwerp Rules allow

10 Art. 815, Code of Commerce.3 | P a g e

the loading of cargo on deck.

deck cargo

In case such cargo is jettisoned, the owner will not be entitled to reimbursement in view of the violation.

If the cargo loaded on deck is jettisoned as a result of which the vessel was saved, the cargo owner is entitled to reimbursement.

If the cargo were saved, the owner must contribute to general average.

(Reason: the vessel is exposed for many days to the peril of the sea making deck cargo is dangerous to navigation)

If the cargo is saved, the cargo owner must contribute to the general average.(Reason: voyages are usually short and there are intervening islands and the seas are generally not rough)

B. ARRIVAL UNDER STRESS- is the arrival under stress of a vessel at the nearest and most

convenient port upon the instance of the captain, if during the voyage the vessel cannot continue the trip to the port of destination on account of the lack of provisions, well-founded fear of seizure, privateers or pirates, or by reason of any accident of the sea disabling it to navigate.11

Arrival Under Stress Becomes Unlawful in the following cases:1. Lack of provisions is due to negligence to carry according to usage and customs2. Risk of enemies, privateers or pirates not well known or manifest3. Defect of vessel is due to improper repair; or4. Malice, negligence, lack of foresight or skill of captain.12

Who Bears Expenses1. The ship-owner or ship agent except for damages caused by the shippers by reason of a lawful arrival.13

2. The captain shall be liable for damages caused by his delay, if after the cause of the arrival under stress has ceased, he continues the voyage.14

If deviation of route does not constitute arrival under stress, then such deviation is improper. Hence, as a general rule, the captain and the ship owner shall be liable. If the deviation constitutes arrival under stress, both the captain and the ship owner shall not be liable. In arrival under stress, the captain must

11 Code of Commerce.12 Art. 82013 Art. 82114 Art. 825

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file a Protest which is merely a disclaimer for the ship owner not to be liable.

Proper Procedure/ Formalities:1. Captain determines during the voyage if there is well founded fear of seizure, privateers and other valid grounds;2. He shall then assemble the officers;3. He shall summon the persons interested in the cargo who may be present and who may attempt but without right to vote;4. The officers determine and agree if there is well founded reason after examining the circumstances. The captain shall have the deciding vote;5. The agreement shall be drafted and the proper minutes shall be signed and entered in the log book; and6. Objections and protests shall likewise enter in the minutes.15

C. COLLISION- is the impact of two vessels both of which are moving.- the provisions of the Code of Commerce on Collision may be

applicable to cases of Allision.

Allision- is the striking of a moving vessel against one that is stationary.

Rules Governing Liabilities of Parties in case of Collision?1. If one (1) vessel is at fault or if the collision is due to the fault, negligence, or want of skill of the captain, sailing mate, or any other member of the compliment, the ship owner of such vessel shall be liable for all resulting damages.16

2. If both vessels are at fault, each vessel shall suffer their respective losses but as regards the owners of the cargoes, both vessels shall be jointly and severally liable.17

3. If there is failure to determine which of the two (2) vessels is at fault, each vessel shall suffer its own losses and both shall be solidarily liable for losses or damages on the cargo.18

- Doctrine of Inscrutable Fault4. In case of fortuitous event or force majeure, each shall bear its own damage.19

5. If the collision of the two vessels is due to the fault of a third vessel, the third vessel shall be liable for losses and damages sustained.20

6. If a vessel properly anchored and moored collides with those nearby by reason of a storm or any force majeure, the vessel run into shall bear the damages.21

Zones of Time in the Collision of a Vessel1. First zone – all time up to the moment when risk of collision begins.Note: One vessel is a privileged vessel and the other is a vessel required to take action to avoid collision.2. Second zone – time between moment when risk of collision begins and moment it becomes practically a certainty.15 Art. 81916 Art. 82617 Art. 82718 Art. 828, Code of Commerce.19 Art. 83020 Art. 83121 Art. 832.

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Note: In this zone, the conduct of the vessels is primordial. It is in this zone that vessels must observe nautical rules, unless a departure therefrom becomes necessary to avoid imminent danger. The vessel which does not make such strict observance is liable.

- Nautical Rules to be observed by vessels:a) When 2 vessels are about to enter a port, the farther one

must allow the nearer to enter first; if they collide, the fault is presumed to be imputable to the one who arrived later, unless it can be proved that there was no fault on its part.

b) When 2 vessels meet, the smaller should give the right of way to the larger one.

c) A vessel leaving port should leave the way clear for another which may be entering the same port.

d) The vessel which leaves later is presumed to have collided against one who has left earlier.

e) There is also a presumption against the vessel which sets sail at night.

f) The presumption also works against the vessel with spread sails which collides with another which is at anchor, and cannot move, even when the crew of the latter has received word to lift anchor, when there was not sufficient time to do so or there was fear of a greater damage or other legitimate reason.

g) The vessel which is not properly moored or does not observe the proper distances, has the presumption against itself.

h) The vessel which is moored at a place not used for the purpose, or which is improperly moored or does not have sufficient cables, or which has been left without watch, has also against itself the presumption.

i) The same rule applies to those vessels which do not have buoys to indicate the location of its anchors to prevent damage to these vessels which may approach it.3. Third Zone – time when collision is certain and up to the time of impact.Note: An error at this point no longer bears any consequence.

What is an Error in Extremis?- The sudden movement made by a faultless vessel during the third

zone of collision with another vessel which is at fault under the second zone. Even if sudden movement is wrong, no responsibility will fall on the faultless vessel.

- If a vessel having a right of way(privileged vessel/ faultless vessel) suddenly changes its course during the third zone, in an effort to avoid an imminent collision due to the fault of another vessel, such act may be said to be done in extremis, and even if wrong, cannot create responsibility on the part of said vessel with the right of way.

Procedure for Recovery1. Protest should be made within 24 hours before the competent authority at the point of collision or at the first port of arrival, if in the Philippines and to the Philippine consul, if the collision took place abroad.22

2. Injuries to persons and damage to cargo of owners not on board on collision time need not be protested.23

D. SHIPWRECK22 Art. 835, Code of Commerce.23 Art. 836

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- a ship which has received injuries rendering it incapable of navigation.

- is the loss of a vessel at sea, either by being swallowed up by the waves, by running against a thing at sea, or on the coast.24

General Rule: The loss of a ship and its cargo shall fall upon their respective owners.25

Exception: If the wreck was due to malice, negligence, or lack of skill of the captain, or because the vessel put to sea was insufficiently repaired and equipped, the ship agent or the shippers may demand indemnity from the captain for the damage caused to the vessel or to the cargo by the accident.26

SALVAGE LAW (Act 2616) February 04, 1916Salvage

- is the compensation allowed to persons by whose voluntary assistance a ship at sea or its cargo or both have been saved in whole or in part from an impending or actual peril, shipwrecks, derelicts or recapture

- Services one person render to the owner of a ship or goods, by his own labor, preserving the goods or the ship which the owner or those entrusted with the care of them have either abandoned in distress at sea, or are unable to protect or secure

Derelict - Ship or its cargo which is abandoned and deserted at sea by those who

were in charge of it, without any hope of recovering it, or without any intention of returning to it

SUBJECT OF SALVAGE: 1. Ship itself2. Jetsam 3. Floatsam or Flotsam 4. Ligan or Lagan

Requisites for Salvage Award:1. Valid object of salvage2. Exposed to marine peril3. Voluntary salvage services4. Success in whole or in part, or that services contributed to success

Basis for entitlement of Salvage Award: 1. The labor expended by the salvors in rendering the salvage service. 2. The promptitude, skill and energy displayed in rendering the service and saving the property. 3. The value of the property employed by the salvors in rendering the service, and the danger to which such property was exposed. 4. The risk incurred by the salvors in rescuing the property salved. 5. The value of the property salved. 6. The degree of danger from which the property was rescued.

RIGHTS AND OBLIGATIONS OF SALVORS AND OWNERS • A salvor, in view of maritime law, has an interest in the property. This is called a lien, but it never goes, in the absence of a contract expressly made, upon the idea of a debt. He is, to all intents and purposes, a joint

24 Moreno, Phil. Law Dictionary, citing Phil. American Gen. Insurance v. Delgado Stevedoring Co.,9 July 1974.25 Art. 840, Code of Commerce26 Art. 841

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owner and if the property is lost he must bear his share like the other joint owners.

• If the ship and its cargo are saved together by the salvor, the salvage allowance should be charged against the ship and the cargo in proportion of their respective values, as in the case of general average; and neither is liable for the salvage due from the other.

• The salvor has a right of possession of a derelict for purposes of a salvage claim. A derelict is a boat or vessel found entirely deserted or abandoned on the sea without hope or intention of recovery or return by the master or the crew, whether resulting from wreck, accident, necessity, or voluntary abandonment.

Persons without Right to a Salvage Reward:1. Crew of the vessel saved2. Persons who commenced salvage in spite of opposition of the captain or his representative3. Person who fails to deliver a salvaged vessel or cargo to the Collector of Customs.27

Rules on Salvage Reward 1. The reward is fixed by the RTC judge in the absence of agreement or where the latter is excessive. (Sec. 9) 2. The reward should constitute a sufficient compensation for the outlay and effort of the salvors and should be liberal enough to offer an inducement to others to render services in similar emergencies in the future. 3. If sold at public auction (no claim being made within 3 months from publication), the proceeds, after deducting expenses and the salvage claim, shall go to the owner; if the latter does not claim it within 3 years, 50% of said proceeds shall go to the salvors, who shall divide it equitably, and the other half to the government. (Sec. 11-12) 4. If a vessel is the salvor, the reward shall be distributed as follows: a. 50% to the shipowner; b. 25% to the captain; and c. 25% to the officers and crew in proportion to their salaries. (Sec. 13)

Towage- is a contract whereby one vessel, usually motorized, pulls another

from one place to another, for compensation. It is a contract for services rather than a contract of carriage.

Distinctions between Salvage and Towage ContractsSALVAGE TOWAGE

Governed by special law (Act No. 2616)

Governed by NCC on contract of lease

Requires success, otherwise no payment

Success not required

Must be done with the consent of the captain/crewmen

Only the consent of the tugboat owner is needed

Vessel must be involved in an accident

Vessel need not be involved in an accident

Fees distributed among crewmen

Fees belong to the tugboat owner

Salvor takes possession and may retain possession until paid

Tower has no possessory lien; only an action for sum of

27 Sec. 3, Salvage Law8 | P a g e

moneyCourt can reduce amount of renumeration if unconscionable

Court cannot change amount in towage even if unconscionable

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